also on the world of politics, from florida, charlie crist announces he will seek the u.s. senate seat as an independent. implications for not only the state of florida but also national politics. as we begin today, we will actually choose a quote from

president bill clinton about the nation meeting to be futuristic one. that the country has to turn itself towards tomorrow. we will show you what he has to say and invite you into the conversation about the u.s. must be a tomorrow country. you think we are ready are one? what is the definition in your eyes? good morning, once again. the event we are using for our discussion this morning was the peterson institute for international economics, it happened here in washington yesterday. a there were a number of speakers, including the former president. also heads of the debt commission, looking at how to revisit the u.s. debt. we heard this quote from president clinton and we thought it would be a good thing to talk to you about. let us play it and we will

invite your comments. >> america has got to be back in the future business, we have to be a tomorrow country. we have to create more jobs, revive manufacturing. we can't do it if we keep mortgaging our future to other people. the way to sell this to people in america is to tell them half of our debt is held by people and other countries and soon it will be 75% and do they wanted for their -- do they really want that for their children and grandchildren? then i would tell them that i would be careful how i do this. i would it everything i can to minimize the burden on the old, the poor, and unfortunate, but that in order to do that, you have to change the way you do health care, the way we do energy, the way we do education, -- and you have to reverse the age ratio.

host: that is the former president yesterday. you hear what he says, the tomorrow country -- create more jobs, revive manufacturing, address federal debt, minimize the burdens on the old, pork, and unfortunate, change the way we do health care, energy, and education, and this last point, that the country needs more immigrants. we need to change the age ratio. we would like to hear whether or not you agree that the u.s. needs to change its focus and what you think of the prescription. let's begin from montana, carmine on the independent line. caller: i think a lot of what the president -- is 100% right. the last part where they want to add more people to the country -- i think that needs to be really looked at. find out who we got here. i think it is a great idea of to

be progressive like that, but you can't be that way when you have one party boating totally and all the different areas we need to improve things and go forward in the future so how can we do anything when we have an obstructionist party keeping us from doing anything? >host: michael, republican in maryland. caller: i agree with president clinton. i think is absolutely right. we have been a society investing in today in everything and we need to invest for the long term. i think that is the best way to approach things. our transportation system, health care system, social security, we need to think long term. i am a republican. i think they're really have not had a chance to vote for my republican party because of some of the choices that they made and some of the actions they have done but i do believe that we need to eat with people to stand on their own feet.

i don't think we need to string people along and give them welfare package is and things like that. i think everyone should be able to be equipped to stand on their own two feet and that is my opinion. thank you. host: markets a democrat from all calla, florida. president clinton exhorts us to be back in the future business. what do you think? caller: i think he is right on with many of the things that he said. i think the biggest thing left out is would need to reform the political process. until we get rid of the special interest money that goes to the campaigns, if we did not seriously look at going into some sort of public finance of our political campaigns, we will not solve any of our problems correctly. just look at the recent events with the process we have gone through, trying to get the financial form -- a reform system bill passed.

the banks have taken of that process but a look at what we just went through with the health reform process. a the drug companies and the insurance companies dominated that process and the spot -- distorted what the true facts are. until we can reform how campaigns are financed, we will never get -- the real interests of the american people will not be served. host: i pulled the story from "the financial times calls " this morning because shanghai, china, having a six-month expo, bringing a strong array of multinational business exhibitors and already yielding benefits for the city of 20 million people. futuristic yet fruitful, is the name. and below it is a box that talked-about china, the burden of urbanization, the scale of what they need to do is enormous. they write in "of finance of times" that --

anderson, indiana, jamie on the independent line para caller: how are you doing? i wanted to say that -- i was taught in school that our country was a nation of immigrants but nevertheless now we see today there is a push to use our southern strategy to dictate immigration. i don't know what tomorrow may hold but i do think, though, that this is very interesting and i know that tomorrow, we take the immediate future tomorrow, continued to see people who want to use the southern strategy will further expose biases when immigration

issues come up in the senate and then the next supreme court justice, if he appoints a minority, i do not think this country will be built to stand it because the -- objections from people who are using the southern strategy, you would get michael steele, who is a minority himself leading the rnc and saying that is a problem and they need to lead away from that. that is not obama's fault or any black guy who does not really trust republicans, i used to be a republican but i could not in good faith continue to support the southern strategy considering that i as a black man was offended at some of the things the republican party has been doing so i do think tomorrow will probably see a permanent minority status of the republican party as they solidify and pander to this southern strategy, i think it will cost them, the largest voting bloc in this country,

legal mexicans that come here, will be a voting bloc that i think will run as fast as they can away from the republican party. of the southern edge strategy is killing them. host: we are talking about president clinton and his statement at the peterson institute that the united states must get back to the future business, we must be a tomorrow country. on the screen are his prescriptions. we would like to hear what you think. redding, pennsylvania, william, republican line -- reading, pennsylvania, william, a republican line. caller: my own, and is -- president clinton, i know it is hindsight but he passed nafta and i think that is the biggest problem in manufacturing in the i watched some of the budget stuff earlier this morning, and the budget seems to be such an amazing problem that i can't

believe they tried to get health care through on paid when we have all of these other problems. host: what do you think about thinking to the future? talking about these issues today. caller: i agree. i watched the peterson program right before this and something does have to be done, guaranteed. host: the question of how to do it, it sounds like? caller: well, yes. but robbing social security is not the answer, i think. host: our next call comes from ike watching us from oxon hill, maryland, on our democrats line. caller: good morning. i was calling because i definitely agree with what the former president had to say -- like host: including the fact

that we need more immigrants? caller: the reason why i agree with that point is because i feel there should be a pathway for people who are illegal to become citizens, and they actually want to live the american dream and that is something all americans share. and also, we action and race them as americans and provide the pathway we would actually pay more revenues and they could pay into the tax system. that would be a good way. host: our next comment on u.s. as a tomorrow country, thinking about the future, john, arlington, virginia, independent line. caller: i disagree with pretty much everything president clinton ever said - as far as i'm concerned, every time he speaks he is a threat to our constitution. host: in what way? caller: the previous caller

mentioned nafta and gatt and i recall ross perot in those debates and everything he said came true. and the giant sucking sound of jobs -- well, we are trillions of dollars in debt because of these contests and ideas which suggest that our constitution to this kind of inverted market. they are still totting this globalism and sacrificing the competition of the united states and security as a result and that is why people want to come here, why they wanted to come here. but when he is talking about bringing in a foreign attitude -- because that is what you're doing -- you have to assimilate. you can't assimilate if you dilute the constitution and sacrifice it for some global principle. that is pretty much exactly what

all of these and national leaders all over the world are trying to do right now out of there in the political speak. and the crisis management aspect of their failures is a tool that they have been using for years. as far as i'm concerned, clinton and even the republicans, the leaders that in the past since i have been alive, 40 some odd years, have been total, a tear failures to the constitution. i can't stand them. will not vote for them and i want to get them the heck out of office now. host: how old are you john? caller: i am going to be 43 next month. host: because he said during my lifetime. just looking at the arc of the presidents that you experience. all of our guests this morning play into this discussion in one way or another. first up at 7:45 a.m. incident -- eastern time, talk about the

european financial crisis and the topic is the situation in greece, having a handle on that, and whether it is a threat to global recovery particularly in the united states. it later on one of the chief co- sponsors of the errors on the immigration bill, state representative john kavanagh. he will be here to talk about why the state of arizona went into the direction it did and answer questions about reports you have been hearing about the arizona law. and the white house and justice department are considering a very quick legal challenge, the decision of up to the white house on that. finally, we will talk to a member of the house financial- services committee on financial market regulation after the senate debate and the hearings with goldman sachs this week. so, all aspects of this question on what it is like to be a tomorrow country and the implications of increased globalization might be. >> telephone call from

pittsburgh. republican line. caller: you might laugh at me. i enjoy your station very much, by the way. you may laugh at me, but if you look in the book, amos, you will see what is going on today. today we are a sodomite nation and the blind are leading the blind. sorry, we don't have that tomorrow because we are not going to change. we are going to go down this road and it is going to be the end for us. i'm sorry to say that. it breaks my heart. i'm 75. the ones i feel sorry for are the children. those that are 3, 4, 5 years old now. they are the ones that are really going to suffer from that idiocy and a rejection of the lord. i am sorry to say -- tell you

this. so long parrot host: next it -- so long. host: next is duncan. caller: i think the last caller was interesting but i think we need to be more optimistic. i live here in arizona. just like janet napolitano had a big story -- sending to the board of the national guard troops and stop and i think it is called the unnecessary -- totally unnecessary. i don't know why we have such a conflict of interest with mexico and the border. we spend all of this money building a wall crossing the arizona desert to keep out the border people. it is going to bankrupt us. who is going to build it, first of all. where are you going to allocate the funds? and plus, i heard also we are going to work on, some americans who raised their children and lived here a certain time, a list.

i think -- after all, they pick our free -- our fruit, because we cannot take care of our business in jamaica. try to get a chiquita banana -- we can get one because our policies are wrong. the more americans who wake up to the fact that we are the ones who have the voting power to take over this country again and make the right decisions, if we actually do what obama says, have that -- time to oversee what it puts in front of the senate and republicans when i do something. i think everything is a catch- 22. i hope somebody has something more positive to say and i thank you for your time. host: duncan from tucson. in today's news, off lead story

and "the washington post" is on the upcoming elections. we are talking about president clinton's comments about looking to the future as a nation. the next telephone call is for wayne, indiana. this is their role, independent line. good morning. -- darryle. caller: i am contract to a dod consultant firm and what we are

doing right now is creating technologies to make the border much safer. that is number one. you do have individuals doing that right now. number two, as far as clinton's key points as far as a successful and better american, i grew agree with it completely. -- i agree with it completely. the only problem i have is the last portion, more immigrants. that is the problem we currently have right now. even as of right now, i would say per surface area we are completely over populated. and also proves it economically because as of right now, but the population we have, we don't have enough jobs. i could tell you as far as pertaining to a long term, and and limit will remain in the high percentages, between 8% and above. that is just logic.

so, i don't think we need more immigrants. if we do need -- we actually need to look more immigrants -- for more immigrants that are highly skilled, that would be a great asset. besides that, i don't see how it could actually help us. it would be much more of a burden if we add to decide to bring more immigrants who lack proper skills. that is just my perspective. host: thank you for sharing what it with us this morning. we mentioned the the announcement yesterday that today officially charlie crist would make the switch from the gop to running for the senate as an independent. i want to show you some of the national coverage. "the wall street journal" -- florida gov. will exit senate republican primary and campaign as an independent.

also "the miami herald" says charlie crist goes alone. the front-page lead story. looking at it from the money side, "the washington times", a gop would take cash back if cirst leaves -- crist leads party. we have the capital view reporter for "the sentinel." we know the particulars. the governor will leave the republican party and run as an independent but what are the implications for the race in the state going forward? guest: crist is a unique character in florida. he has never been a darling of the right wing of the republican party. statewide candidates in florida, a large bell weather, typically have to run to the right in the primary and then back to the center in the general election.

the republican primary opponent, former state house speaker marker rubio, pretty much capitalize on this anti- government, anti barack obama waiver that was rising up among a lot of the voters so by running as an independent he sort of is trying to cater to what has been his traditional base, which is centrist voters -- independence, moderate republicans, democrats who are not necessarily completely welded to their own party. so, it puts the race on its head. host: he will have to declare to the voters whether or not he intends to caucus with one party or another in order to have effectiveness in the senate. any indications of his leanings? guest: i don't think he has to say it yet and probably will not have to say it for a while. he is, more so than any other politician in florida, he is adept at using television as his

medium, manipulating television. his message initially will be very simple, that he will be running against what he will describe as a culture of corruption in the republican party, he will be running as the people's candidate. those kinds of particulars will probably get passed out in the coming days. he is still a republican governor so a republican elected official and will remain so throughout the campaign. all of these supporters, the owners, canting folks who will continue to stick with them are republicans -- supporters, donors, campaign folks who will continue to stick with the republicans. host: what i had been seen yesterday suggest that republican donors, consultants, staff will all have to make big decisions. guest: it is really

unprecedented for florida because he is going to have to do a retooling of his campaign. not just changing campaign managers but he is going to have to develop an entirely new donor base because for the most part, all of the money he has had coming in our traditional republican donors. there are movements to try to get them to ask for their money back, but the governor does not have to give the money back. but in terms of raising another 10 million, 15 million, $20 million that he would probably have to do to see it through conclusion, he does not have a donor base he can tap for that so he has to build everything anew. host: what date is the primary? guest: august 24. host: as of this morning there are quotes from national political observers say it guarantees it will be the no. 1 senate race in the country. i know you are covering it from the state perspective but i am sure you always at the national

ankle. what do you think it means for national politics, how the republican party will fare with voters in the fall election. guest: there is a national story line, republican party turning back to the right to try to flee from this attempt to sort of modernize itself and go after new voters. here in florida and nationally as well the party has tried and largely failed to reach out to hispanic voters and bring them into its base. crist was called the future of the republican party by john mccain when he visited in 2006. so this is a real blow to moderate republicans who wanted to try to make their party more inclusive. host: you mentioned he would run on the story line of corruption and the party, but how important will the florida economy be in the race over all? guest: that is one of the main reasons why he has become a little more vulnerable, and the

fact that he did accept stimulus dollars and he was hammered over acceptance of federal stimulus dollars. the economy plays into how voters will view his success because he is of the governor -- and above the governor has very few options for what he could do to try to improve the economy, it is a factor why his numbers have gone down. he used to have stratospheric approval ratings. still not bad numbers -- it could give us the particular of the announcements -- host: give us the particulars of the announcement. guest: 5:00 p.m. in a park in st. petersburg, his hometown. he will have teachers union supporters. there will be a mix of republicans and democrats. there will be some of his longtime friends and family. as homey and anti-washington and

tallahassee as he could make it look. host: thank you for the background information. becoming the senate race to watch in 2010. that was the capital view reporter for "the orlando sentinel." you can read his local reporting on their website. and lots of other national story is -- stories. as charlie crist abandons the republican party in his bid in his primary race to market rubio. let us get back to telephone calls. talking about president clinton's exhortation at the petersons did that the u.s. must be a tomorrow country. on the screen, the former president's prescriptions. let us hear your calls. texas, scott, a republican line. good morning. caller: good morning. the impeached pervert has definitely identified some of the problems -- jobs,

manufacturing, unsustainable debt. and we know it would just eat us completely up. his solutions, his progressive- type solutions, his and the democrat party of more government, more taxes, more regulation, that is what is creating the problem. government is not the solution, it is the problem. our housing crisis, all of that created by government. host: that is bought from texas. next is a comment from los angeles, larry, democratic line. caller: good morning and a sincere -- we really appreciate c-span out here in the nation. host: thank you. caller: i did get a chance to what former president clinton as he spoke at the pearson group yesterday. and the president seems to be,

he continues to be well read, well-informed, and a very eloquent speaker and very benevolent with his time as far as issues like haiti and a tsunami efforts in the past. i also tended to disagree with some of the president's positions. he was asked about ross perot yesterday and what he meant to the campaign during the time that the president was a candidate and was elected, and i sincerely fear that nafta, as a couple of previous callers indicated, had a very detrimental impact on our economy, from the standpoint of not having the environmental and

labor laws in effect to protect the workers in the countries who are in direct competition with the united states. i have no problem with immigrants. i just think that the borders need to be secured. i don't disagree with what arizona is doing. they are just trying to protect their populist and arizona put into effect a program that identifies the illegals, it is just a matter of them going somewhere else. until use secure the borders, it will be like john mccain's web kamal ferry during his presidential candidacy, they would just go somewhere else. i think you should secure the borders and take advantage of the people here in the country and educate and train them to do what you need to have done as far as technical and innovative jobs. thanks very much for c-span. host: president clinton was

instituted at the peterson institute by bob schieffer and you can walk to the entirety on our video library, a little over an hour long. c-span.org, and look in the corner for the video library tat and it would be easy to find. the president -- former president, just following up on the comment from the last caller. next is a phone call from merrimack, the hampshire. jack, independent. what do you think about the u.s. needing to be a future-looking country. caller: i think it should be. i think it is ironic. he certainly was not thinking of the future back in the 1990's, when he was running around molesting a teenage intern's. ihost: that is all have to say n the topic? caller: that's it. host: molly, republican line. caller: i kind of enjoyed the people calling in and saying they agree with president

clinton and as usual, the majority of dumbed down citizens in this country, did not even listen to what he said. not only did this president put through nafta, he got rid of glass-steagall which protected this country from the very thing that happened to it. it is incredible to me to listen to this former president -- no, he is just doing what he does. he just says what he says. he just does with the progressives want to do in this country. and hidden down below in health care is cap-and-trade and all of the things that are causing europe to go down the tubes and he wants to embrace these things and call it our future? what he wants to do is ignore the great past of this country. they don't want to talk about how it was. that is why they have the health care plan where everything is coming out every day that says, yes, there is a death panel, yes it is going to be 50% more

expensive than obama new two days before they voted on it, they knew it was going to cost a lot more. they are not taking our country into the future. they want to turn it into europe, which is failing every day, falling apart because they went down this path. socialism has failed. the experiment is known. host: we will jump been at this point. thank you for the corporate newport news, virginia, jan, democrats -- thank you for the call. newport news, virginia, jan. caller: it is interesting, all varieties of what people have been saying. it is like, you cannot drive looking in the rear view mirror all the time did you have to look forward. and all you have to do is look at our children and grandchildren and what they are doing. they are ahead of us. they are not going to go back.

they will go forward. you cannot change progressiveness. host: how do you think washington would respond to looking long term on issues? caller: yes, and sorry -- host: the question, here in washington, moving beyond the politics of the moment to look at long-term solutions, how the legislators sell the concept to the public? caller: that is going to be difficult, i'm afraid. but i think a lot of us would like to hear new opportunities and new jobs for our children and for the future. just take the incident out there of the louisiana coast. everyone is saying drilled a look of the problems that all of the things that created that the drill for oil. look for the mess it causes when we can do air, solar. all the things we could do that

would be not unhealthy. host: in fact, the oil spill is the front page in many papers. "the houston chronicle." we are now learning that the leak boosts the oil flow and digesting the news reports this morning that the current flow of oil from uncap the well is five times what was or originally projected. that continues to grow as a problem off the coast. i want to show you the three capitol hill newspapers because they each tell a bit of legislative story coming ahead on the climate bill and legislation. "that bill" tells us quite a bill will come before immigration -- "the hill." there was a walk off from lindsey graham of south carolina, insisting the move -- to move on climate and energy before immigration. then we move on to "roll call"

senate democrats did it for strategy for moving ahead without gop support. finally, "politico," democrat seeks new republican on immigration. the effort is an attempt by majority leader harry reid to get around the road block caused by lindsey graham. they are looking for an advocate and hopes to attract the republicans wanted to replace him. three aspects of a story about how both bills will move forward. from twitter, gary duncan says -- and miami, this is neal, independent line. caller: for the last eight years, the republican party got us in the mess we are in. i live right here in miami and

in miami -- they have the money to put in this no child left behind. they had problems and all kinds of things because -- no doctor or lawyer. for no child left behind, for people to be educated that is the biggest crop i heard in my life. my wife worked in the office. me and you don't think the same. how will you take a test saying every child thinks the same. if he would not have took the stimulus money our economy and

florida would be worser -- it saves the police, teachers, firefighters. the reporter of -- i hear this all the time. i have been here all my life. in florida i heard jeb bush was not popular -- jeb bush was not popular here. host: west palm beach, anthony, republican line. caller: good morning to you. in regards to president clinton as a tomorrow country, i think it is absolutely ridiculous. i lived in washington, d.c., during his administration and he was moving for one world government way back in the mid 1990's and now we have obama, he is really a clone of clinton. but i would really like to comment on the charlie crist thing. we are glad charlie crist left the republican party. he really was a liberal and

brooks brothers clothing so i don't think he has a chance. they say he is a closet homosexual who got married to hide his sexual preference. we are really glad to be rid of him. host: next is a call from houston, texas, patti, democrat line. caller: good morning, how are you? host: thank you. talking about definition of a tomorrow country, whether or not you think we are one and we should be. caller: president clinton is very, very intelligent. like florida and all of them, i think they forgot how bad it was when president clinton took over in the only thing he did, he straightened up all of that when he was in there because it was so terrible and i lived through that and i had children that was in school and everything else and when reagan and the other bush came in it was so terrible and in eight

years he turned it around so very -- and then eight years when bush was in there it just went down the tubes so this gentleman is very, very intelligent and if he can turn around -- listen to him. i mean, he is so intelligent. and the thing that he said, i know he don went there and tried it and see what all of the thing before he even talks. and if they go on and do that our country would turn around again and they keep on saying we are in debt and we are in debt, you always have to spend something. if you don't spend something for the card you will not have it. host: the former president says the country needs to deal with the debt situation did caller: right. host: you agree with that. caller: this is what he is saying --

host: before our next call, one of the events happening today in washington is the funeral service for more free heights, civil rights leader who died at the age of 98 -- dorothy height, and you can see a metro section story in "the washington post" with admirers, supporters, and colleagues going to the funeral.

there were 1300 people at the celebration of life including representative john lewis, bill cosby, actress cicely tyson, and many of the women wearing their finest tax. from our website this morning, if you are interested, at a look at her famous trademark hats as she spoke about civil rights throughout her long career in washington, d.c., and around the country. next is a telephone call as we look to the future according to an exhortation by bill clinton, the u.s. must become again a tomorrow country and did back in the future business and the next call is from chicago, gillian, independent line. caller: to me it isn't incidence of the government pulling the wool over your eyes because how

can you move to being a country of tomorrow when the problems of today still exist. people are so blinded in my opinion because they say, democrats did this, republicans did that. they both want the same thing, just taking different routes to get there, in my opinion. and i believe we can't move forward because things are going to continue to stay the same. host: acknowledging the problems are still here and the issues are all the things we are talking about -- the question is whether the political process can devise long term solutions rather than short-term ones. you think it is possible to do? caller: i don't. like the health-care bill, a constantly hear them say this bill isn't perfect. why are we passing it? why are we enacting it into law? it is not like it they took another month and worked on it

and try to get things where they need to be -- the country is not going to, everyone in the country is not going to buy -- die if they don't do health care in the next couple of days or so. i think you get the best possible bill you can get. that is what i mean. it will just be a band-aid fix and the problems will continue to exist in the future. host: dave on the republican line. caller: hillary did not want to be a liberal and now she is progressive. in both parties -- big government, whether commented on the left or not see on the right, all these big governments. i think it is just trying to preempt the language and i think really what it is is the democrat party is going to be the party of yesterday and that is really what is going on.

and his last comment was on wac o, and he tries to pull the strings and blame attorney- general -- now he tries to use the progressives language but it is not working. host: did you watch the speech yesterday? caller: i watched the peterson think, john the best and all of the people, they are covering their -- cya, a typical big government causing the problem again. host: the next call is from riverside, california, johnny, democrats line. caller: everybody is listening but a nobody paying attention -- saying jobs. that is what we really need in america. we can't do it if we don't got jobs. and i really appreciate -- host: how do you think we find

more jobs in this country? caller: like he said, manufacturing jobs, we need manufacturing jobs here. host: how do we encourage manufacturing jobs to come back to this country? caller: if you cannot get them coming back you build your own here. host: build your own. thank you. michigan, rick, independent line. caller: i have ideas for education and jobs. take a big cities like detroit. they've got certain sections of the expressways that are below ground level. and usually on both sides of the expressways there is usually some areas, maybe the first two blocks, -- my ideas, also with big business in the area, a lot of their home offices are becoming white elephants for them to handle any more. i say, move the people in these areas into their business

buildings and turned into schooling and housing complexes, where they live and where you have teachers living there also and giving kids 24 our education if they need it and then take the areas, the expressway sections that i talked about, you can turn them into mass of research and development centers. waste treatment, water treatment, to genetics, biochemistry, just massive research and development. host: thinking about solutions from michigan, one of the states with the highest unemployment rate in the united states. sasha sends us this tweet -- >> is employer -- the --

next is kansas. caller: i like in principle what president clinton says but i think with too many progressives, when they say thing before, i think what they say is jettison everything that has happened in the past. when you look at education -- would look a former eastern bloc countries that score so much higher in science and math -- that there is something new happening.

. i think we rank lower than the sum of the countries that would make your hair stand on end. we keep talking about going forward, going forward. if you look back, i have seen educators recently just talking about our high water mark in terms of education back in the 1950's and early 1960's and even before that if you track back to the history, going back to the civil war. americans were the most literate and educated on the planet and yet we are not getting prepared. i live in a small town in kansas and if we ever thought about bringing manufacturing jobs -- and what they mean our low-wage, i'm all for manufacturing but the economy around the world has changed. other countries epic of the low rates. -- low-wage. we need to retool ourselves. we talk about manufacturing. what about small companies, lean companies, high-tech companies,

so when they talk about this -- i am a conservative and conservatives are not against progress but just because somebody says progress, it does not necessarily mean that everything is going to be fine. it could mean you are burning down the house. i think we need to look at these things. fine, let's talk about progress but let's really make progress. let us not just posture and make things worse, which seems to me that is what we are doing now days. host: how does the discussion like this get started. caller: you got me. i honestly don't know how we do it. when you look at the cycle we are in now, i am mystified because, one, i guess it is polarized. two, i am not even sure if the legislators that we have can solve the problems for us.

politicians according to a poll did not know as much as average citizens. a lot of them did not know that only congress have the authority to declare war. what are we going to do? i haven't a clue. i can just say, i don't know. i would not say i'm pessimistic. i'm happily married guy, we observed life going by. i wish the best for my kids and i want them to succeed. but given the circumstances, i think it is going to take some

kind of a major crisis to finally wake us up. generally america is good at that, when a big crisis hits we run around like chickens with their heads cut off and then we come together. and then beyond that i drive down the turn pike and i would say this is a good day to finally get solved his darkly -- host: >> it is mali -- next is malika from lexington, ky. tell us about the u.s. as a feature country. caller: i think we have always been a future but we have got

away from that. i do not know it was president clinton -- i watched the whole presentation yesterday -- but what was mentioned, we have to think forward. also with clinton when he set destruction of the -- structure of the congress is all messed up. with all the spending. i know it was one of the aircraft or something. or the secretary of defense said that we no longer needed to

build. but those of representatives did not want to go with that. they wanted to build the engines, i guess, because they were built in their state. when president obama announced a new vision for nafta, there was noise, noise, noise. our representative -- i don't think really know what is going on. it is just all tunnel vision. host: this morning we will invite you, if you would like to continue this conversation, to find c-span's facebook page. you can continue the dialogue whether or not you made it onto the program this morning. it is facebook.com/c-span.

a couple more minutes on the thought of whether or not the united states is a country that looks to the future. president clinton said yesterday we must get back to the tomorrow business. next to the call from ohio. independent line. caller: create more jobs, manufacturing in this country does not want to create more jobs in this country because of the wages. they are going to other countries, other countries because it is cheap.

on immigration, they exported jobs out of this country that could plead leave the country. they allowed illegal immigrants. i and not against a person coming into this country legally. that is fine. but our government allowed illegal immigrants to come into this country to lower the wages on the job that could not be exported out of this country. manufacturing has totally vanished. if you could get good manufacturing jobs. the jobs he could base your life on. you could go buy a home, get a 30-year mortgage, and you could plan on being in that job for 30 years to pay off a home.

the government -- big business lobby the government and they said about so they can come into an area, get a big tax break and when the tax breaks are over, they are gone. host: our last caller on this topic is from atlanta, this is george, republican line. caller: susan, good morning. i watched the peterson even. america has all -- always been known as a feature or tomorrow type of country but it was because of the innovation and self-sufficiency of our people. hearing that coming from clinton yesterday, on the one hand he wants to build a country where there is more than -- more and

more government and more people work for the government and more people dependent on the government in one way or another. that can't be a feature country. host: how can we as a nature become a feature country again? caller: people becoming self- sufficient and not looking to the government for support, for handouts, for being taken care of. that just weakens us. it takes away our creativity, it makes us weaker. it is not any thing that can lead to anything interesting. it is just a plodding have we seem to be on right now, where people just want to be taken care of. it is kinda depressing, you know, it really is.

host: sorry you are depressed, because you have the last word. remember, you can continue the discussion on facebook this morning -- interesting topic from all points of view. we will close today. i know you have been watching us cover the british elections with our coverage of the first ever at debates among the candidates. you have probably seen on the internet or the cable talk shows that the prime minister, wearing an open microphone yesterday, committed what many people are calling a gaffe by calling a constituent he spoke to a big hit as he got into the car, not knowing his microphone was on. .

certainly the papers i have looked at, it is a major disaster for brown. it could be yet another turning point in this election, and

could be the death knell of labor. >> did you plan to vote in the election, what are your plans now? >> they have not changed. i have already voted. i voted early in the week. >> do you mind telling me who you voted for? >> of all i am a conservative. i think this is good news. it will help to firm upper the vote for the conservatives. probably, the track from labor's vote. >> everybody makes a mistakes. i will support them and still work with the labor. so far, they are doing a good

job. if you change the government, they know what they're doing. if we have a new government, everything will go backwards, a few years until they pick it up. host: on your screen is uri dadush, director at the carnegie endowment for peace. we invited him here this morning to give us a primer on what is happening in europe and globally. thank you for being here. in a nutshell, described the heart of the situation in greece. guest: they have a gigantic public debt, about 20% gdp, it

has a very large deficit, now 14% gdp. the numbers have just been revised upward. it also has a very large external deficit, current account deficit. it is in a very deep recession, there is a loss of confidence. greece is uncompetitive. it's a labor cost is far too high relative to its productivity. therefore, investors have lost confidence that greece can be paid its debts. host: and they have a deadline in front of it when they have another significant truck and the debt that they have to work on. -- traunche in the debt that they have to work on. what is next for them?

guest: members of the european union are not allowed to help greece. according to the treaty, there is a no-bailout provision, which was issued at the time liro -- the euro was introduced. in germany has to foot the largest part of the bill for any kind of aide for greece. typically, they are not allowed -- legally, there are not allowed to do it. this is one of the pendant's -- impediments that have caused delays, but they have come up with some creative language to set up the package and have them amount to support greece. -- vowed to support greece. we are now in a complicated to

tuition where, now that greece has asked for help, has to go through their own constitutional processes in order to approve the package, specifically, the german parliament also has to approve it. host: this would seem to develop tensions of nationalism for residents of each state. is that not what politicians will be facing? guest: there is a strong backlash in germany against bailing out the greeks who had mismanaged the their fiscal situation, that have lived beyond their means. this is one of the strong headwinds that chancellor angela merkel has to confront, especially as she has a regional election coming up on may 9. host: we want to get to your

telephone calls. what we want to do today is answer your questions and also talk about the implications for europe and also globally. asian fever hit spain. the crisis has cost greece. in "the new york times) -- "usa today" -- just as they look at some of the newspaper stories today. before our first phone call, can

you suggest how this could grow beyond greece? guest: the contagion, so to speak, is already there. it is affecting the yields on the other the honorable countries, beginning with portugal -- vulnerable countries, beginning with portugal, spain. there is a small increase in the spreads that italy has as well. if you put these economies together, they would represent about one-third of the output of the european union. so this is not a small episode. of course, it has a major affect on the euro, which has decrease in billion against the dollar by about 10 percentage points, and

that affects the ability of the u.s. to export, not only because of the euro, but because of the slowdown in the your area. -- euro area. of course, if the crisis escalates, as we have seen recently with lehman, and then you are likely to get spill over to other parts of the world, specifically targeted this time at the sovereign debt of governments. host: hell could this bailout from the richer european union nations, can it solve the problem, is it enough? guest: of course, it depends on the size of the package, and that is being revised upward. i am among those who believe, in the end, the amount of money

greased would need -- greece would need to finance itself over the next three years is so large compared to the political desire of its partners, at some point, the credit of greece is going to take a hit. it could just be rescheduling of the debt, in other words, you just pay later, or it could be much harder. host: we are already seeing protests in the streets of the grease about cutbacks, concerns about jobs. how willing -- streets of greece about cutbacks, concerned about jobs. how willing are the public, in

terms of reducing spending? guest: probably as much as the american public. [laughter] the greek people are not that rich. the average take-home salary is probably $1,500 a month, at best. a large number of them depend on the government, actually. host: so where is the spending? where is it going? what have they been spending on? guest: government sectors have expanded greatly.

their productivity has not kept up with these increases in wages and the increases in government spending and they simply cannot afford the standard of living the have. it is inevitable that they will have to take a cut. and it is inevitable that their real wages will have to decline. but of course, they do not want to do that. that is the way it is. so there is strong political adjustment. host: first phone call from long

island. john on the democrat's line. caller: with our friends of goldman sachs in the news lately, i wonder if you could comment on the fact that they are a big part of greece must problem today. -- greece's problem today. i had heard that executives sold greek government these products, they did not carry them on their books, in their accounting, and that is creating the problem they're having. i wonder how many other countries, like spain, portugal, maybe ireland, experienced the same thing with these investment bankers. if you have any knowledge on that, i went up or do to comment

on it. -- i would love for you to comment on it. guest: the previous the greek government, evidently, cooked the books in a major way. i say this because in the course of last year, in the fourth quarter, the new government came in, they've revised up their estimates for the fiscal deficit in 2009 by doubling it. just recently come up again, and that estimate has been revised upward. so there has been concealment of spending, over estimate of revenues of enormous magnitude in spain. the case that you are alluding

to, i understand goldman sachs and other investment banks assisted the greek government in a certain kind of swap arrangement. i believe it was about the time when neighbor entering the euro and were under pressure to show lower debt. whether or not this is a legal operation, i am not in a position to judge. what i do know it iis and this s -- what i know is this is a very small part of the creative accounting that the greek government engaged in. i am not aware of what the situation is, with respect to

these kinds of instruments, as it applies to the other vulner able countries but i suspect some of it is going on. whether it is illegal or not, i am not in the position to judge. host: and our guest has his degree from harvard university. he also worked as the director of economic policy at the world bank. at the carnegie endowment, he is the director for the new international economic program. carnegie.org, you can find an entire section on what is happening in greece. in the ap --

is their military budgets such that this will make a difference? guest: i am not familiar with the details of the military budget, but it is significant, a significant expenditure increase -- in the greasgreece. host: next phone call, a silver spring, maryland. independent line. caller: i am very interested in economics, particularly the austrian strain of economics, compared to the keynesian. i wanted to ask, if greece just

printed the money? but what happened next? guest: greece could not print money to pay their debt because they are now part of the euro area. they gave up their currency over a decade ago. by the way, the question is meaningful. because in another context, if this was the u.k., for example, and they are not part of the euro area, you could engineer the devaluation of the currency. you could reduce your wages, so to speak, in international terms, by allowing your currency to decline. that is not possible in the state of greece right now, and

it is not possible to print euros. that operation is in frankfurt. the operation of the press depends on the agreement of a very large number of countries, germany, france, etc. host: do you think it was wrong to have everyone start using the euro instead of their own economies? guest: that is a tough question. this is the central question. there are many advantages to having a single currency. i wanremember how it was dealing with all the different countries and how impractical it was dealing with all of the currencies.

but for many other reasons, having a single currency is a great step forward. however, the creation of a single currency also implies that you have the arrangements that are similar across the country. also, you hope that different countries are not hit in different ways from a variety of shops. in that way, you lose the capacity to respond individually. unfortunately, in the case of the bureau -- euro, although some pointed to the problem going in, that these situational arrangements are all the extraordinary different. partly because of the way trade

unions work in different countries or because of the way government operates. in fact, spending has been rising at different rates, wages have been rising at different rates. countries no longer have the instrument of their currency to adjust to these changes in relative wages. host: for buyers. bill, republican line. -- fort myers. caller: i wonder if anyone is looking into how a credit default swaps is taking down a priest? i know it may not be demoted to take down a company, but they almost of down our largest companies. i wonder now if they are turning to countries themselves? guest: credit default swaps play a useful role and that there are

a lot of investors who have complicated trading positions, and they like to hedge the risk of some of their portfolio. so there are some useful attributes to these credit default swaps, but is true, the markets for a credit default swaps have taken on gigantic magnitude, and it is possible to speculate on these credit default swaps to be long or short on them, and therefore, the premiums that people pay for them. however, i should underline, in

my view, and the issue in the end is not a credit default swaps, greek debt, which is all determined and a very active market. the fundamental issue is the capacity of the economy to pay its debt, and whether the country is increasing wages at a rate that they can afford. that is the fundamental problem. the speculation -- certainly, there should be ways to moderate it and make the market more transparent, but that is not that fundamental issue in the case of greece. the issue is economic imbalance. host: related to that, "the washington post" editorial this morning --

do you agree? guest: i do not agree with the tone. there is this kind of -- how would you say, punitive interpretation of what should be done to these countries. and the situation in different countries vair ries.

i believe the greek government kept its books and the serbs -- deserves what may happen. but if you look at spain, ireland, these are also countries that are under pressure at the moment, but their government debt, as a portion of gdp, was lower at the beginning of the crisis than germany or france, and they managed their fiscal situation relatively well. even today, spain's debt to gdp ratio is 55%, which is significantly lower than germany's or even of the u.s. so the issues and go much deeper than fiscal mismanagement. again, they have to do with the loss of competitiveness and these countries. some of it you can attribute to

irresponsible wage setting. some of it really had to do with the dynamics of countries have been cut into the euro, in a nutshell -- is a complicated subject. as countries went into the euro, there was a huge conflict in their ability to grow. they were adopting modern international -- institutional frameworks. and they had had 10 percent interest rates, now they had 5 percent and interest rates. people had confidence in the currency. the effect of this decline of interest rates, which was a natural part of the acceptance process, in many ways, was to create a big boom which facilitated whatever wage

pressures there were. this happened pretty much systematically across these now-of vulnerable countries, even though some of their governments managed in their fiscal situation perfectly well. so what we are observing here is the coming of age of the euro. i describe it as the adolescence crisis. i hope that they mature after this. now people are realizing that things are still bad. host: boston is next. benjamin, democrat's line. caller: i do not believe a word that he is saying. the banks knew that greece was cooking its books. the central bank knew that interest rates were dropping because they controlled the rates. he is a world bank global

list, a nzazi -- host: we would respond to the first part, but when you have personal attacks, that is it. next phone call. caller: i appreciate c-span. i watch it every day. i wonder, in a way, are we not falling in greece's footsteps? their government is spending more than they can afford, borrowing when they cannot raise taxes? host: are we falling in greece's footsteps? guest: yes and no. like many others, i am concerned about the long-term fiscal situation of the united states. the debt ratio is already high,

but it is going to get a significantly higher in coming years, in part, because it will take time to reduce the deficit after the recession, and in part, because of the effects of an aging population, social security, pension spending. so at some point, the greek situation is also a lesson for the united states, as it is for other countries, that it needs to get its house in order. the interest is -- answer is no because today, the u.s. is not in the same position as greece. the u.s. has greatly improved its financial competitiveness over the last five, 10 years.

indeed, part of greece's problem is that they have lost its unit labor costs, increased much more than its european partners, but also with respect to the united states, and others. the u.s. is a much more competitive economy than greece is, a much more diversified economy the united states, of course has its own currency. how the u.s. dollar -- the u.s. dollar but just up and down depending on the economy, among other things, and therefore, as greater flexibility to respond to shocks, than in greece. i do not see them in the same

place today, but unless they fix some of these very long term negative trends on the u.s. accounts, that at some point, the u.s. could confront a sovereign debt crisis, just like any other country. although, if we do so, we have many more instruments to respond with host: richmond, virginia. caller: i do not want to be adversarial here, but i have a lot of international friends. we always talk about and brag the euro. i told them, all lot of these countries have different

agendas. one country is rich, one is poor, and then you have a central bank located in germany. we have federal reserve banks in each state, banks that contribute to the united states. we do not have to depend on other people -- basically on the same continent, but different languages, different agendas. the american dollar -- america is always complaining about we do this, we do that. but the american dollar is strong. host: what do you think of his theories? guest: i agree generally.

the u.s. dollar is still, today, the world's leading currency. even before this episode, i did not see much of a threat near- term to the u.s. dollar as the leading u.currency. the euro does suffer precisely from the fact that there is a conglomeration of these different countries, subject to different rules. it is only really at the beginning of any kind of political unification -- of course, europe -- and so not

surprisingly, european countries do not have a strong, federal fiscal capacity in the same way that the u.s. has. the kinds of issues that are rising right now in greece would be much more easily managed if you had a much stronger centralized fiscal capacity. but we are a long way from that. one of the effects of the crisis could be -- we have not really talked about it -- but one of these countries could go outside of the the euro, and that would undermine the credibility of the currency. host: one thing at the carnegie endowment is 5.4 greece, suggestions on how the country can solve the problems they are facing. thank you for speaking with us this morning.

in our next segment, we will bring the discussion back home. you will meet in republican arizona state representative john kavanagh. we will be right back after this news update. >> authorities are saying the newest week on the side of the oil rig that exploded and sank off the coast of louisiana might be closer to the coast than previously known and could have oil washing on the shore by tomorrow. but now submerged well is leaking five times more oil into the water than originally estimated. women on submarines. it could be closer to happening with the navy is expected to date -- make an announcement today. a phased approach is being considered by which officers who already have separate living quarters would be the first to go coed, with women crewmembers

sleeping together. arizona's tough targeting illegal immigration is expected to face a number of challenges beginning today. the national coalition of latino clergy and christian leaders plans to take the state on in court. a voter group is considering a petition drive to consider putting up a question for a state-wide vote. finally, on the economic front, stock futures have been rising as investors again turn their attention to an improving domestic economy. also, plenty of earnings reports will be released throughout the day. the labor department releases its report on weekly jobless claims and is expected to show a drop in workers seeking unemployment benefits. those are some of the latest headlines. >> this morning, funeral service

for dorothy height. president obama will deliver the eulogies speech. live coverage begins at 10:00 eastern. later in the day, the third and final british political debate between prime minister brown, the conservative party candidate, and the liberal party. courtesy of the bbc. host: on your screen is state representative john kavanagh, republican of arizona, a major proponent of the new immigration law. are you surprised by the reactions after your assigned in by the governor? guest: not at all. anything that has to do with illegal immigration get to a lot of attention, raises a lot of

passion. this was totally expected. what was not expected was the great amount of misinformation that is being thrown around. that is causing a lot of unnecessary alarm. host: we are giving you the opportunity to talk about that misinformation. i am just going to let you describe it. there are many points that people have heard, whether or not it will cause racial profiling, whether or not it will upset relations between the citizens and police department. make your case, please. guest: there are a lot of moving parts to the law, but let us focus on the ones that are getting attention. no city can tell it's police officers that they cannot inquiry into the immigration status of somebody that they lawfully contact. we make a few exceptions, but

that was the problem. we also require police officers now, when they reasonably suspect that someone they are lawfully contacting is an illegal alien, that they question that person. this is simply extending a policed tool called stop and question, created by the supreme court in 1968. the court says any time a police officer reasonably suspects that a person may be, it is about to become or had just committed a crime, they may detain them and question them about the activity. we are now doing this with immigration. as this went through the committee hearing process, we had a lot of input. civil-rights advocates were concerned about racial profiling. we thought that their case was reasonable, so we wrote into the law that a police officer may

not use race or ethnicity as the sole person is -- purpose for the reasonable suspicion. and to the extent that they do use it, only one is allowed by federal law. we had a police chiefs saying that we do not want our men doing these things when there are other things occurring. so we wrote into the law, this reasonable suspicion only has to be done when it is practical to do so. so if an officer is doing one of the stop and question, and over the radio a robbery in progress alarm comes up, the officer would let that person go and respond to the more urgent crime. it is a matter of practicality. i am a retired detective sgt. we are concerned that this may scare away crime witnesses. we wrote into law, these

questions do not need to be asked if they hinder an investigation. so we took care of those concerns. would you like to go into depth on that section? host: i would like to move on. our callers will ask more. guest: another part deals with day laborers. we have a big problem where day laborers stand on the street corners and potential employers drive up to hire them. it causes traffic problems, disruptions in communities, demonstrations, littering -- it is a very negative thing. in addition, this streetcorner labor pickup is bad for the state. most of these people work off the books, so they work off the books, you do not get fair labor

laws. many of the people that do they labor are illegal immigrants. so we put into the law, if you stand by the roadside to get work, it is illegal if it impede traffic. we had to include that to make it constitutional. we also have sections that say if you knowingly transport an illegal alien or harbor them, or concealed them, you are also guilty of the state offense. with respect to that law, you also have to be doing another offense. religious people, clergy, social service agencies, were concerned that perhaps somebody driving an illegal alien to work through they did not know could be arrested. of course, it is only nominally when you know when the transport

and illegal where you are guilty. but to go the extra month to take care of the concerns, we added that not only must you know that they are illegal, but you must be committing another crime. we are really trying to focus humans smugglers here. also, if you are picking up people for work. your vehicle can be impounded. we also made a state crime to be in the u.s. illegally. so those are the major parts. again, democracy worked. as we went through the committee process, as different groups raised their concerns, we addressed them and changed law. we think it is a good whillaw. host: there is one challenge coming from the government, the justice department'.

in the "washington post" -- could you talk about the fact that you think it will survive that challenge? guest: it is scary when washington talks not only about the legal issues in our law. when you are talking about litigation, it should be pure law, and when you start to add politics, that is scary. the obama administration is clearly not enthusiastic about this enforcement. the bush administration dropped the ball on illegal immigration enforcement. the obama administration cannot even find the ball. we spend hundreds of millions of dollars on a virtual that's because the people who are sympathetic to the illegals did

not like the idea of a real offense that keeps people out. we did not think the virtual fence would work. now two weeks ago they scrapped the whole idea. the obama administration is cutting back on border patrol agents. it became obvious to arizona that the federal government was not going to protect us. in fact, they are going backwards. that is why we are going to uphold law ourselves. now they want to invalidate our law. the justice department and white house showed really read their own prosecutors manual. in fact, i have a couple pages from the manual. section 19-18 from the criminal manual. this is the manual that u.s. attorney's work from. let me read you a bit of it. this section deals with an

arrested illegal aliens by state and local officers. specifically authorize the state and local offices to "enforce criminal laws and make arrests for violations." there was also a general federal statute which authorizes certain authorities to make arrests for violations of federal statutes. the fifth circuit of appeals has held that this authorizes local officials to issue processes of the arrests to be executed by law enforcement. rule four provides an arrest warrant shall be executed by a martial or some other authorized by law, which includes state and local offices. section 439. also mentions local offices being able to pick up illegal aliens. here is the best one of all.

the u.s. versus holiness calderon, a 10th circuit case. it persons appeared to be illegal aliens, the u.s. court of appeals held as follows. a state trooper had general investigative authority to inquire into illegal immigration status. it goes on to the ninth circuit court. their own prosecuting manual mentioned multiple federal statutes, multiple court rulings, all that say the same thing. local law enforcement can make arrests. we have been doing it for decades. this whole new thing that we cannot is wishful thinking on the part of opponents of the bill that fly in the face of case law and rulings from the attorney general's office. host: we have said from the beginning that this has got a lot of attention.

doug on the independent line. california. caller: i am kind of nervous, if you could bear with me. there is a simple way to take care of this. that is punishing the employers. if they were fined $10,000 for any illegal found on their work place, first time, every time, from this point forward, across the country, there would not be an illegal alien working anywhere. i am not against people coming here, but it has to be legally. they should use e-verify, and that way the employers would not have any excuse about their status. the reason we have the problem that we have is because of lobbyists. you have 10 million different

laws, but if you put the employee responsible first, because they are the ones hiring, and you put a mandatory jail term on them, just like you would for anybody -- host: i am going to jump in because we understand your point. john kavanagh, your response? guest: the government does have some internal border enforcement. i do not think it is strong enough, not done often enough. there was just a case in arizona where instead of making an arrest, they said a letter to the company saying that these employees may be illegal. we addressed this issue in arizona two years ago by passing an employer's sanction law. an employer who knowingly employers and the illegal alien,

on the second offense, the company loses their business license. i agree, this is an important tool. anti-illegal immigration activity has to be multifaceted. you have to secure the border, go after the illegal aliens, go after those who employ them, take away their benefits, and you take other measures to make it as uncomfortable as possible to live in this country. then rather than having immigration sweeps, disturbed people, and rightfully so, these people will leave on their own as the jobs are no longer there. host: from an economic standpoint, you say to make it as uncomfortable as possible, but many believe that they are doing the jobs that americans do not want to do. what is your response to that? guest: we have 9.7% unemployment

in arizona. i do not think these people are sitting by idly. i think that is a bogus argument. granted, there could be some backbreaking, cheap jobs that americans do not want to do. i was in the yuma observing the vegetable packing. but we have a guest worker program. we bring in workers across the border to do this work. they do it the right way. they do not let these people stay here for ever. they do not let them bring their families so we are burdened with education and other social costs. they only come in a few months at a time, and then they go back home. so they reestablished that connection with their families. immigration is this going mexico and other countries that send large numbers of their young, healthy man up here. i read in the "new york times" that there are villages in

mexico that are devoid of young men because they are all here working. they do not come back to visit, they are lonely, they abandon their families. there are a lot of victims of illegal immigration, and many of them are in mexico, but they will not admit it because they want the money. host: next phone call. caller: i want to commend you for what you are doing down there in arizona. what you have to understand is, here again, the politicians are behind this. if you check out every working person in america, the vast majority are opposed to making 30 million -- and it is not 11 million, those are lies. 30 million illegal citizens. just like here in washington yesterday, somebody said that he

wants to pass a resolution in a council where our city will not do business with arizona. who the hell is he to speak for washingtonians? this is the kind of thing that we have to be mindful of i am glad that you are taking a stance down there. mr. obama needs to be working on jobs instead of immigration. that is what he needs to be working on. before this is over with, we might all have to be working in strawberry fields and chicken factories because it is going to be a long time before jobs come back to america. even before the great depression, gas did not come back until the war. these jobs that people say americans do not want, and i do not believe that. i never see anyone jumping up and down in the streets for

legalizing. host: he talked about washington, d.c. council actions. i have heard about other areas discussing economic reprisals. it is arizona concerned about that? guest: not at all. first of all, there is a full- court pressure on public relations-wise to kill this bill. it was started by the governor -- it was started to intimidate the governor. she held her ground and has signed it. now you have people claiming both accounts. the bottom line is, these politicians do not represent american opinion. they may represent it in a few areas, like san francisco. we had the mayor of phoenix oppose this bill and said that the knicks would sue. you went back to the city council and then said that we are not going to do anything. in arizona, rasmussen poll,

three-one of supporters support the bill. hispanic supporters -- voters support this bill. maybe a couple of councilmen in washington will boycott, but the people of america support this bill. after we get rid of a large number of these illegals and our streets become safer, because they cause a lot of crime, more people will come to arizona. host: critics say that you envision a country where we all carry papers to prove our citizenship. what do you think of that? guest: i appreciate your bringing that myth up. as if we were going back to nazi germany. there is no law that requires anyone to carry documents.

this mistaken belief, mistakenly put forward, is based on a section of the law that actually does the reverse. if you are being stopped and questioned because of reasonable suspicion, and you have certain government-issued documents, you are presumed to be here illegally. if you voluntary show the police officer those documents, you are on your way, like an arizona driver's license, tribal identification card, birth certificate. so if you do it, if it is the right document, you have proven legal residence, you can walk away free. host: new york city. beverly, democrat's line. caller: sir, you started off by reading the federal laws against

illegal immigration. since you read them, it is quite similar to what you enacted. why do you have to make new laws? why not just follow federal law? also, you just mentioned documents. if a person is picked up and he voluntarily gives documents, he is off the hook. what happens if he does not have the documents? how does he prove that he is legal? does he go to jail first? i am not saying i am against it, but there are a lot of questions, a lot of things in the federal government that can take care of this, so why enact this law? why not just follow the federal government? guest: you had two questions.

the first is why we are enacting our own laws, we are not. we are incorporating federal law into arizona law. we want to do the enforcement on local level. it is funny, all the objection to these laws, they were already in place. it is already a federal law for anyone not a citizen in the u.s. to carry documents. that is something that already exists. by the way, we did not even about that one completely. if you voluntarily give them, you prove that you are here legally. another point that i would like to clarify, police officers cannot stop anybody can say, are you here legally and question them about their status? . under this law, police must have

a reasonable suspicion that this person is here illegally. this will almost only occur if someone is stopped for another offense, like a traffic offense. so if the police pulled over someone who rolls through a stop sign, approaches the individual, they do not have their driver's license. the officer says, why not? it is suspended. what is your name and date of birth? the officer can check the records. he discovered there is no such issued license. he goes back and says there is no driver's license issued under your name. what do you mean to spend it? well, i have a mexican license. i came from over there. when did you come, how did you get here illegally? did they give you paperwork? do you have document? you have a green card. what color is it?

you know green cards are not green. that is how you build reasonable suspicion. when there are independent, observable facts and that creates suspicion. all that does is allow a brief questioning about immigration status. during the questioning, police will be looking for lies, conflicting answers, or evasive answers. as the person gives those and as he observes, each response is another grain of sand. it all goes on a scale. the stock occurred because there was reasonable suspicion. if it does not go beyond that, they will not be detained for immigration status. but as the law is, as evasive answers continue, that will probably tip the scales over. but if questioning does not

yield the additional information to go to probable cause, this person will be released. it is a half century-year-old tool that police are used to working with, and every police officer in arizona is being updated with this training which will give him good and bad reasons to suspect the legal status in this country. .

caller: i want to preface this to say that when the gramm's the energy bill to be bombed by immigration is outrageous. -- lyndsey kurram's energy bill to be bumped by immigration is outrageous. i have a friend whose family has been here since before there was

a united states of america. he speaks spanish. the was walking down the street -- if he is walking down the street with his wife or his kid saw and he just wants to speak spanish to the officer, on face value it looks like the south african apartheid. guest: under those circumstances there is no grounds to do any kind of even questioning about the person's immigration status. this law requires reasonable subsume division based on how observable facts -- reasonable suspicion based on observable facts. speaking spanish, being spanish, that is not browns for someone to report -- for some to suspect -- that is not browns for

someone to suspect that you are here illegally. host: what would be grounds? guest: there is one situation that i can think of, you are near a federal detention center and you see someone running away from it in an orange jumpsuit. other than that, nobody is going to be pulled over or question it simply because they speak spanish, they look spanish. that is racial profiling and we specifically put in a bill that you cannot use race and ethnicity alone. and you can only use it to the extent prohibited by federal law -- allowed by federal law. if an officer stops and question

someone because they are spanish, the officer is in violation of civil rights and this new law. that is the case of about officer, not a bad law. nobody is coming out and saying because a few rogue cops racially profiled in traffic stops -- a few cops racially profiled in traffic stops, nobody should make traffic stops a draw. you get rid of the few bad cops, not a good law. host: on the federal law versus state law, let me have you respond to a headline in the "washington post."

the arizona law does not merely mirror federal law has its defenders insists, it broadens and usurps it. we do guest: not broaden the federal law guest:. we do not broadened -- guest: we do not broadened federal law. we did not create our own immigration law. the we did not even change immigration law. in a couple of areas we made it more difficult -- in the case of transporting and concealing. in federal law, merely transporting and concealing makes you guilty. we added that there should be another crime because we did not want its passers to be concerned. now they say that we are doing the wrong thing. it makes no sense. we are not requiring

documentation to be carried. federal law does. why is the "washington post" not complaining about federal what? we have more safety is to prevent people from being inadvertently arrested. i have the prosecutors manual. it clearly states multiple court decisions that law-enforcement locally has and can enforce these laws. host: republican line from arizona. thank caller: you. you have been very -- caller: thank you. you have been very direct, sir. i appreciate your knowledge and you have answered most of my questions. this is a sovereign country and we exist without chaos with laws. my husband was stopped coming on

because his right front headlight had garnered and the first thing an american citizen or anyone is s is for your -- is asked is for your driver's license and registration. if he did not produce those he would be in trouble because it is the law. people are worried are hurting people's feelings. illegal immigration is hurting our feelings and causing us a lot of problems. a police officer has the right to say, what is your name and what are you doing. if you are here, you should have your documents just like we have to provide our driver's license and proving shirt -- proof of insurance. if they are here illegally, first of all, they do not have a

driver's license and insurance information, that is suspect. every illegal, from canada, mexico, the middle east, wherever -- we cannot afford it economically and this is a political situation. they want a blanket amnesty again so they can get 14 million votes to stay in office to usurp our laws. if we citizens have to observe them, everybody else house to and it is not -- past two and it is not a civil-rights issue. and -- if we have to observe them, everybody else has to and it is not is a rights issue. guest: thank you for the compliment. prior to my years in june -- in new jersey, i spent years in new york. that is where my directness comes from. i will stop going westward

because the next area would be california and they pretty much messed up their stayed with immigration. but the caller does raise an excellent point about the cost of illegal immigration. in arizona, the cost of -- the costs are backbreaking. millions of dollars. the when you talk about the cost of educating their, children, medical care and other government services, it runs into probably $2 billion a year. add to that the more expansive benefits that the legal children of illegals because they were born here and you are pushing pro with $3 million or $4 million a year. -- probably $3 billion or $4 billion a year. the 5 cents you save on a hamburger is not all wilthe who.

those that work on the books under false i.d., their salaries are usually so low that they pay virtually no income taxes. they draw more benefits and dollars than they contribute. this should be replaced with a guest worker program to the extent that we need additional labor. and those immigrants that we allow in -- and we will need a lot of immigrants coming into the future as us baby boomers retire -- i would rather draw the law-abiding foreigners who are in their countries on waiting lists doing it the right way to be screened coming into this country. i do not want launderers who pushed ahead of these good people. -- ahman jumperlawn jumpers whod

of these people. host: there is a piece with the headline "y arizona?" he writes the immigration statute is legal. it gives police officers on another tool when they come into contact with illegal aliens when they're in their normal enforcement duties. phoenix is the hub of human smuggling and the kidnapping capital of america with more than two under 40 incidents in 2008. -- 240 incidents in 2008. next telephone call for john kavanaugh, who is with us for about five more minutes is from new york city, paul arm the democrats line. -- bahaulah on the democrats line. caller: my name is paulick.

if i agree with this bill of 100%. wish we had this in new york city. across the street were there during construction, there are mexican guys. there are no black americans over there. we need jobs and they are giving them to them. it is really hurting us. guest: not only are illegal immigrants taking the jobs that americans can have, they are also suppressing the wages that americans could do in the same industry. when you pay people off the books, that suppresses the wages of everyone else in construction, food service, what ever it is. i am hearing rumors and hearing talk that other states want to adopt arizonas law. that is why the obama administration is getting very

uneasy. this is kind of the equivalent of an immigration tea party movement. it is long overdue. host: next call from washington, curtis on the independent line. caller: thank god for legislators such as yourself. what you're doing is long overdue. i am an african-american male and i cannot believe that the african-american community has not supported in this. i sought out sharp in the of the day and all he spoke about was -- i saw al sharpton the other day and all he spoke about was racial profiling. there is a high murder rate of young black males in chicago where they are considering bringing in the national guard. this illegal immigration is heard in black america more than any other thing. thank god for you. you are doing a wonderful job

and i hope the rest of the nation mirrors what you are doing in arizona. guest: i thank you. and that is the voice of america. in arizona, 3-321 for the law. in the rest of -- 3-1 for the law. and the rest of america, 2-1 for the law. host: next telephone call, buffalo, this is phillip, good morning. caller: can you hear me? host: yes. caller: this country is in dire straits. thank you for much of the work you are doing, but until november rolls around and then 2012, we have got to get

different people in office. we cannot have people who are holding power -- not just obama, but everybody that is in theire. i cannot understand where the democrats are because they are driving our country into socialism just like they are in europe and we will go down the same tubes. they believe that and that is exactly what they are doing. immigration, they want this course. and i believe this immigration deal throughout the country now is going to be the trigger for mr. obama to declare martial law. guest: i will tell you one thing, all of this talk from the obama administration about dealing with immigration now and certain incentives, they are not. right now, they're on the losing

end of this issue. republicans have the chance of making significant gains in the u.s. senate and the u.s. house. if they try to push through this amnesty bill, we will make gains and takeover boathouses as a prelude to 2012. -- take over both houses anas it relates to 2012. the only thing i do hope they do is secure the border. because all of the enforcement in the world is not going to help as long as the border states are as porous as they are. and that is not to speak of the danger like the drug runners and drugs and maybe even terrorists. host: one-third of arizona as citizens are hispanic and the arizona central, which is the phoenix news home page, says --

you are quoted as saying you are worried about u.s. citizens and legal immigrants leaving. would you talk about that? guest: yes, because of the lie is being spread about this law. there was a phoenix city councilman who was quoted in this same newspaper, which is very sympathetic to illegal immigration. they're not illegal aliens or illegal immigrants, the undocumented -- they call them undocumented migrants. in this the same paper they said -- this city councilman said that we should require all hispanics to carry documentation of legality when they are in phoenix. and phoenix police should check everybody they stop's and citizenship papers to we are not accused of profiling. that is ridiculous and that is what is driving the fear and

peter the stupidity of what is driving this law or the purpose of this law. there are safety checks and measures to stop racial profiling. we took all -- to care of all of those problems. -- we took care of all of those problems. it is misinformation that is scaring everyone. host: next call for john kavanaugh. caller: first, thank you for your service. it sounds like you have a had a very long and involved career in terms of law enforcement. i wanted to say thank you for that. i do not think a lot of self

sounds like it is going to much further beyond anything that is already on the books, like you said. what did give me pause -- and i wonder if you could give us a bit of insight into the making of a lot -- was when you were talking about the details of halcro with the law works. one of the issues you mentioned -- of how although lathe law wo. at one of the issues you mentioned was that you said in order to make its constitutional and you had to throw in a piece about impeding traffic. that made me wonder about the constitutionality of the law. it seems like you are pushing back on a different problem at a different route and in order to you that you're walking a very thin line to solve a systematic problem. you are walking a thin line between upholding a constitutional principle and trying to do as much as you can

without going beyond what the principles are. host: is a different route economics? caller: i am sure the route is many things. -- the root is many things. i'm sure it comes down to things like the economy and human nature and society. guest: you have to know the tremendous problem -- live in arizona to know the tremendous problems that day laborers have caused. it has caused massive eruptions -- interruptions in communities. but as i said also, it also facilitates worker abuse because they do not have all the protections and -- if facilitates worker abuse because they got have all the protections. it pops up everywhere. the labor solicitation is in

many areas. but standing on a corner looking for work is a constitutionally protected right. in order to stop that behavior, we can only enforce it if they are doing something else wrong and it is impeding traffic. and we copy that from a phoenix law. phoenix had a problem with a corn -- acorn doing what they do enand what they eventually wound up doing is saying, ok, only when it disrupts the traffic. again, prevent trafford problems and prevent the disorder -- traffic problems and prevent the disorder on the street that occurs. everyone knows that the overwhelming majority of people who run these streetcorners are

illegitimate because they cannot use the more legitimate means of gaining employment. host: that is our time. thank you for being with us as we take our calls across the country. "washington journal" has won more guests, congressman brad sherman is here. -- has won more guests, congressman brad sherman is here. he is a member of the house financial services committee. and he will be here to talk about wall street and regulation. we will be right back. >> it is 9:22 a.m. in washington d.c. the number of americans fall -- filing claims for jobless benefits dropped for a second consecutive week. analysts said that as evidence that the job market is slowly improving. initial applications for jobless benefits dropped by 11,000 to 448,000. that is the lowest number in four weeks, but still slightly higher than many economists had expected. meanwhile, the intensifying

situation in greece is the -- is triggering talk of a global crisis, similar to what happened with the lehman brothers collapse in 2008. david wise, chief economist at standard and poor's in new york says while the greeks -- presuppose the economy is small, the potential is for a exposure that is widespread because of panic. there will be a hearing on the greek situation today. that will be live on c-span radio and c-span3 tb. the two coal miners are missing after a rock fall in western kentucky. united mine workers officials say two are missing after others escaped 150 miles west of louisville. and there is a recall of baby cribs today. with the consumer product safety commission warning that babies could suffocate or strangle in the cribs are the simplicity --

in the cribs by simplicity and greco. new confined up more information on the web at www.cpsc.org. and those are some of the latest headlines on c-span radio. >> "washington journal" continues. host: this is congressman brad sherman. he is a member of the financial services committee in the house of representatives. and while all of the action has been on the senate this week, it looks like he might have a vehicle for the debate to move forward as the senate works through the process. what has it been like what -- watching both the hearing this week and also the filibuster and altman move forward with the senate? guest: it has been an interesting show. the senate always provide entertainment. i have been involved as a

democrat, concerned that we do not see bailouts in the senate bill. and in the change that i expect to receive the -- on the manager's amendment that will prevent the fdic to make unlimited loans, to take unlimited loans from the treasury and use those to be allowed to the financial institutions that have gone belly up. -- to bail out the financial institutions that have gone belly up. and i do not know if this was in the original senate bill, this bailout avenue for the executive branch to use, and i think is going to be controlled. host: this is the point of contention over the creation of a bank sponsor fund to be used to? guest: there are two separate issues, bailout and taxpayer paid for bailouts. my focus is do not have the taxpayers paid for the bailout.

the $50 billion is going to be collected from wall street. my guess is that it will be out of the bill. the whittlesea. but my guess is that in addition -- we will see. but my guess is that in addition to what we collect, the fdic could do bailout's with its unlimited credit line from the treasury. that is what we wanted to stop. host: did the goldman hearings changed the debate? maybe guest:. it was just one more strong on the camel's back. guest: maybe, it was just one more strong on the camel's back. -- straw on the camel's back. i think the house bill is a good bill and what we need is more controls on derivatives and higher consumer protection. and we need an orderly way to wind down the phone to financial

institutions and are to do that without the tax payers bailing out counterparties and the creditors. as we saw in late 2008, the executive branch is all too willing to do bailouts of creditors and counterparties. the vote was close on t.a.r.p. in the house. in the executive branch in the -- in the minds of the executive branch in 2008, paulson was 110% in favor of his proposal to have $700 billion of worth of bailouts. i think we have got to tell wall street that taxpayer money is unavailable unless they can convince the house of berber sensitive and the senate to provide -- the house of representatives and the senate to provide a future for derivatives.

host: there are nonbank entities, agricultural companies and the like are suggesting that this could impede their ability to hedge their own commodities. it would you talk about that and whether or not you think it would have economic impact if you think these companies could not trade derivatives on cattle futures or corn or whatever? guest: we will certainly have derivatives. they will be exchanged or traded or clearing house derivatives. if that is not exactly the way certain companies have done business in the past, it is a fine way for them to do business in the future, with transparency and more importantly, capital posted. when you by derivative you know you are going to get paid by the person who sold to the derivative and certainly not by the taxpayers of the united states. host: we only have half an hour with you, so i want to get to the phone calls. fort worth, texas, you are on the air.

caller: i was watching on c-span a while back representative alan grayson questioning ben bernanke about some of the money that was being loaned out by the fed and bernanke was not answering the questions as far as who was receiving this money. this leads to my main question, which is, why is it that the arctic the fed bill has not been passed -- audit the fed bill has not been passed? it is your committee that is responsible for it. guest: alan grayson and myself and others are responsible for auditing the bill.

the fed, of course, would prefer to operate without oversight and without audits. i believe that we were successful in getting the provision into the house bill. i think it will be very hard to convince senators to go along with its. in general, the fed is a powerful institution with a lot of friends in the administration. it probably more friends in the senate and house. it does not mean that i am not a friend of the fed. i'm just not a friend of the secrecy of the fed. host: there is a hearing today at 10:00 a.m. the link to two of our topics. it is titled "credit default swaps on government debt, the potential implications of the greek debt crisis. and you want to say work on that?

guest: certainly, but will let the financial institutions played with greece, lending them more money than they could pay and then engaging in some transactions -- it is my understanding that greece has already sold its airport tax for decades into the future. that is a way of borrowing money. you could say, we did not borrow any money, but this revenue stream is now going to our creditors. those types of transactions obscured how much trouble greece was getting itself into. if someone had turned the spigot off on greece a few years ago they would be in less of a hole today and the economy would be in less of a wholhole. currency traders and investment banks have played a role here and what we want is a system in which -- not only do we want

transparency in our banks, but in national governments. host: with the legislation your considering -- how would the legislation you are considering address this? guest: we are not in the stage of christ in -- of crafting legislation. we are just studying the problem. host: west palm, florida. caller: i do not think we are going to prevent risky behavior by these traders. the need to fayette has to be a reality -- the need to fail has to be erotic. -- a reality. i am hoping that those get removed.

also, [unintelligible] is that going to be addressed as well as fannie and freddie and the capital -- capital leveraging of the investment banks? guest: i think we will be dealing with the root causes, but i think economists will be arguing a decade from now as to all the causes. as to the possibility of bailouts, i will say this for all draft of the senate and house belbacha -- of the senate and house bill, the funds will only be available if the management is removed, the shareholders are wiped out. it is not a bailout of a defunct financial institution. that being said, i agree that we do not want to see bailout of the creditors and counterparties. these are the people stuffing money into the suit of the high wire janiccircus performer and n

doing so thinking that there is going to be a safety net. we do not want to much money invested in high wire acts. -- we do not want to much money -- to toomuch moneytooo investen the high wire act. in my view, we could perot would do without this $50 million fund. -- probably do without this $50 million fund. the funds available was not just the $50 billion, but $50 billion in possibility with huge loans from the treasury. i'm glad that the change the

first in the house bill and even more with the changes we will see in the senate go, as senator dodd and i have discussed, we are not going to have that are we and the taxpayers are not going to be on the hook. -- we are not going to have that scrounginborrowing and the taxps cannot afford to be on the hope. as to fannie and freddie, we have bipartisanship in the house of representatives in 2005. we passed the bowl to provide for much -- passed the bill to provide for much tougher oversight of fannie and freddie and it had much more impact in ameliorating the size of this housing recession. we passed it on a bipartisan basis. the bill went to the senate and

was opposed by the bush administration and senate republicans and it died. we passed a very similar bill in 2008. and it became lovitlaw. i think it was a good bill and it was about three years too late. fannie and freddie needed the kind of oversight that was passed in 2008 and they needed it a few years sooner. caller: i watched the house and i watched the senate and i saw from 2006 until now, all of the republicans are just standing in the way of everything trying to be done. i am not just a second-rate person out here. we are smarter than that. we see what they're doing. i do not approve of it. they need to get to work. i appreciate your work and wall

street does need to be corrected. but all of our economy is hope together -- manufacturing, small businesses, even down to a biggebakert. at we need to get these problems solved. and this emigration thing in arizona, this is a distraction. i believe that we need to get a handle on the drug dealers, the smugglers, the kidnappers. we need to get a hold of them. but people who are here to work and provide for their families, arizona should be ashamed of themselves. guest: i think we pass good legislation in 2005 to control fannie and freddie and it is a shame that it ... tide -- that it got tied up until 2008. the caller said it was

republicans and in that case, she was right. host: next call from florida, good morning. caller: you passed regulation for fannie and freddie now, correct? guest: yes, we passed the decision in 2008. and as i said, it was the same -- very similar to the bill that passed the house in 2005. it is a good bill, obviously. by the time we got to late 2008, fannie and freddie were in such terrible condition that no law could have put them back to where they were in 2005. if only we had passed it in 2005 -- were cast in the house, but senate republicans were unwilling to take it up.

host: are you still there? caller: as far as the arizona law, all americans to visit mexico have to have passports. host: we are going to move on to our next call from illinois. caller: good morning. how are you doing today? guest: i am doing fine. caller: bless your heart. i was wondering how you think of the idea of having these banks and institutions charge some kind of fee by the government that can build up over time if they ever needed to build -- a bailout again.

they can take that money and help themselves. i wonder board -- i am wondering what your feedback is on this. host: you are discussing something that was really an issue within the senate debate about the creation of a bank sponsored fund. guest: it is in both the senate and house bill. since the depression we have had one fund of fits the callers image, and that is the fdic reserve fund. but that is just there to deal with your insured bank deposits. it is of treatment of $250,000. $250,000 sounds like just about everything to deal with finance, but it is actually very small part of the financial system. we now have nonbanks and deposits well over to madrid

$50,000 that are not part of that insurance -- well over $250,000 that are not part of that insurance. we have proposals, like the caller just said, to collect funds from those institutions on wall street that have over $50 billion in assets. that is basically the 20, 25 largest institutions. pulte it is certainly a betty, -- a better idea to -- is certainly a better idea to collect the money from wall street than it is to put the taxpayers at risk to bail out the creditors and hothird partis and -- third-party entities for these institutions. if we are going to have any bailout, it should be limited to, funds collected in advance from wall street.

when i use the term bailout, it is not just a matter of bailing out the shareholders and executives, but bailing out the creditors who gave the mistakes that allowed them to play the game. when -- gave them the states that allow them to play the game. host: mr. sherman has served as an instructor at harvard law school's international tax program. he sits on the financial service committee and subcommittee on financial institutions and consumer credit on capital markets and insurance and government enterprises. let's go to our next call, allentown, pa., victor, democrats line. caller: all of these people are you -- are losing their homes.

and we bailed out the banks. why couldn't the government on behalf of the people losing their homes write a check for the people and then the people pay the banks and then everybody is happy,? now you have the banks getting a bailout and now they have frozen. i do not see why that could have not -- cannot have been done. guest: we are doing it to a limited degree. if we go to everyone who's mortgages bigger than the value of their house and write them a check for the difference, we are talking many trillions of dollars and something like that would dwarf the size of the stimulus bill and the bailout bill combined, and i do not think the federal government could afford it. we are providing banks with incentives on those that meet certain criteria to adjust loans and allow people to stay

in their homes. i think that is an important thing to do. but it does not solve the whole problem. i think the focus has to be on those people who can afford to make meaningful mortgage payments every month, but cannot afford the afford adjustment in their payments that is made in these adjustable rate loans with their teaser rates and complex provisions. in those cases, we have provided incentives to banks. i cannot say it is working as well as i would like, but we have helped tens of thousands of people host: -- tens of thousands of people. host: indianapolis, jim on the independent line.

caller: thank you for your bravery. i have seen you on the floor and you have told us about the behind-the-scenes fear mongering. guest: that was a politically difficult time. i thank you for remembering that. pohick caller: -- caller: there is one thing going on and that is to control the front running going on with the computers and quatrain that is going on. i wonder what you think about the minuscule tobin tax to stop that sort of thing. guest: the answer is i have not studied enough to have an opinion. i do think the a and it does not do society a lot of good to have trillions of dollars invested and the invested all in the same hour -- invested end and invested all in the same hour --

invested and and invested all in the same hour. -- uninvested all in the same hour. for there to be some social benefit from the activity, i think that might be a step in the right direction. but right now, i'm speaking about the level of knowledge that i would like. it is not a proposal on the front burner now, and i thank you for bringing another point that we ought to look at. host: stan is on the independent line. caller: good morning, mr. sherman. i have been watching politics ever since the days of j.f.k. and back in 1913 they transferred our federal reserve in a closed session behind congress to the banking system.

my question is, how are you going to straighten out an entity that belongs to the banking system that pretty much does what they want to do? and it has shown that throughout time. how will you create a problem that is bigger than the power of the senate in happen -- and the house? and has been since 1913, an entity that runs on its own. guest: the fed is a very bizarre institution because it has a national board that is overwhelmingly controlled by appointees of the president. but then has these regional boards where it is not so much one person/one-vote, but one bank/one-vote, one corporation/one vote.

when it comes to the federal reserve and some areas, corporations are the only ones with right spirit we're supposed to elected president and the president appoints executive branch officers. the fed is the only government or quasi government entity where it is not reelected president and he likes the executive officers -- we elect a president and he let to the executive officers. you have banks serving on these regional boards and they select a president of these institutions, of the regional boards that have a say in monetary policy. if you have watched me before the financial services committee, you know i have often proposed we have the president select all of the

federal reserve board members, both of the national level and the regional board level. and i hope to move in that direction. i would not say that the fed is more powerful than congress and, therefore, more immune to it. but so far, the fed has maintained its bizarre structure where banks get to control who fills most of the seats on these regional boards. host: the president is expected to name three to the fed board, including a former fed member of the vice chair. any comments on her qualifications? guest: i have not examined her qualifications or promotprayer service. -- or prior service. i think the regulators in

washington are a little too close, too trusting of wall street'. there is a pernicious tennessee, and that is, in order to learn -- a pernicious tendency, and that is, in order to learn of the complexities you enter through the belly of the beast and all too often you become part of the beast. host: next call comes from brad sherman -- comes for bread german from illinois, democrats line. -- next call for brad sherman comes from illinois, democrats line. caller: i wonder about the glass eagle law -- the glass stiegel law, why was it repealed? and with that give more control to the congress then to the

banks? >> plaze siegel -- glass eagle consists of mixing -- glass st iegel consists of mixing. by the time it looked at it, lawyers have found so many exemptions and loopholes that we already had the assurance guys, the commercial bankers and investment bankers -- the insurance guys, the investment bankers and commercial bankers in the same bed for the law -- a long time. jimmy, the question is rather, how big is the institution? bear stearns, lehman brothers, aig -- none of them really mixed commercial banking it to any significant degree with their other activities. in fact, the repeal of glass

steigel and the minister of the two activities was their problem. the problem is the to go out -- is two fold, they were too big and taking too many risks with insufficient capital. i've joined others in introducing a bill in the house that is pattered after sherrod brown's bill and the senate to require the breakup of institutions that have gone to barack -- too big to fail, too big to exist. i am working with bernie sanders on legislation that lays out a number of characteristics, that says, if you exceed these limits, you must be broken up. the standard approach would be more along the lines of -- the barrybernie sanders approach

would be more long lines of -- i do not want to speak for him. i will describe this as a kind of sherman idea that i will give him credit for inspiring. and i say that not to take anything away from him. i do not want to say that is his bill when i know he is still working on it. but in casual conversations, he has inspired me to think that in addition to mandate rules, we ought to give regulators the ability to say, if any others get too big to fail, you ought to bring them up as well. but just giving permission to regulators, if it is too big to fail and you want to break upon, go ahead. i think we need to define certain institutions that are clearly too big because they crossed certain lines and also

give the regulators the right to identify other institutions that for one reason or another are too big to fail. there is no proof or much evidence that society needs institutions over the $200 billion in size to finance business activities. i realize there are certain transactions that are quite large, but banks have a habit of forming so begins -- forming syndicates so that your 3 get involved. we do not need an institution over $200 billion in size in order to finance business transactions. host: next call from illinois. caller: i heard the congressman said that congress does not understand -- that economists do not understand what happened in

this recession. actually, there are some that said this, in some cases, 12 years before this happened. they are not dealing with imaginary models and theories. they are dealing with the real world. one of this guide -- these guys is fred harrison in the u.k., another is mason gaffney in the u.s. he put out a book called "after the crash" about how to design a a a depression-free economy. it is a prime driver of the economy. when the banks are -- you know, they are getting into the fervor, the irrational exuberance, they have easy credit their lending everywhere, that is a secondary cause of the bubble. but the primary cause, the artists -- responding to a demand.

the demand is land. land values keep going up and that has to do with speculation on land. land is a very unique thing. it is in fixed in supply, privately owned, and the mandate keeps going up because the population keeps going up and therefore, the prices tend to go up and then they cannot go any further and then they crash. guest: i did not say that economists had not identified many of the causes of problems in this bill. we will still be discovering causes and debating which were the causes -- the old causes. i think economists have predicted 20 out of the last five recessions, which is to say there is always some group of economists predicting them. in retrospect, it is pretty

obvious, and i did not see this -- almost no one saw this before hand, and that is, if you compare the estimated price of all the housing in america to the income of american families that are supposed to live in those houses, it stayed within a reasonable range. and then about the middle of the last decade shot up and it was clear that the prices being paid for loans in 2007 was completely -- for homes in 2007 was completely out of sync for what americans could afford to pay. looking at that chart, it was pretty obvious that this had to crash. but it became more obvious in 2008 than it was in 2007. host: just a couple of minutes left with mr. sherman. next call is susan on the

republican line from pennsylvania. caller: i do not see any positive outcome. i really do not see any positive outcome from this senate right -- senate finance reform bill. you have all of the cutouts that dodd put in. aig is not affected. the canny and freddie, two of the biggest causes of the economic -- fannie and freddie, two of the biggest causes of the economic downturn are not addressed. you have more on derivatives, and that has changed. i have no faith whatsoever because of what you all did earlier in legislation and in forcing banks to loan to people that could not afford to pay it back.

to me, the senate and house are just as because of the financial downturn as any other part of the economy. guest: i do not think you can criticize the reform bills for not dealing with fannie and freddie because we dealt with them in 2008 and i think there is more to do, but as i said, that bill was passed by the house in 2005 and senate republicans would not allow it to come forward. as to not dealing with aig, that is in receivership now. it is hard to see how much more control the federal government could have, although frankly, i think we should control the board of directors as well since we basically are taking all the risks. i think